Microsoft Launches Office Extension Allowing Online Collaboration

SEATTLE – Microsoft Corp. {MSFT} is unveiling a Web component for its desktop-based Office programs that lets computer users store, share and comment on documents, but the software maker did not go so far as to let people create new files from scratch online.

Microsoft Office Live Workspace, as the free Web site is called, isn't quite live. Starting Monday, users can sign up to be part of an early "beta" test of the service. A number of those users will be able to start using the service at some point this year, Microsoft said.

Office Live Workspace will give users about 250 megabytes of storage, or room to keep about 1,000 average Office documents "in the cloud." PC users can upload Word, Excel and PowerPoint files, and use the site to e-mail friends or colleagues and invite them to read and add comments to those documents through a Web browser.

However, if users want to edit the text, they must open the document using an installed copy of Microsoft Office.

Office Live Workspace taps into a few of Microsoft's Web offerings. Users with Hotmail, Xbox Live and other Microsoft accounts can use that information to log on to Workspace. Once there, they can use their stored contact list to send invitations.

The service is compatible with Office 2003 and Office 2007, and users will be able to save from Office to the Web site and open files they've stored online.

Workspace wasn't intended as a standalone program, said Chris Capossela, a corporate vice president in Microsoft's business software division, but rather a "companion service." At a media event last week, Capossela and Jeff Raikes, president of the division, stressed that users were most interested in using the power of the Web to access their documents from any computer, and for collaborating, and not for creating sophisticated documents.

Office Live Workspace is not to be confused with Office Live, a set of tools Microsoft first developed to help small businesses build Web sites and manage online advertising campaigns. Office Live will be renamed Office Live Small Business, Microsoft said.

The vast majority of computer users use Word, Excel and other Office programs, in spite of challenges from open source desktop programs like OpenOffice. Google Inc. (GOOG) and several small startups offer Web-based word processing, spreadsheet and presentation software, and recently, Google launched tools that even let its programs work offline.

While Microsoft is officially mum on whether it will add more useful features to an online version of Office, Capossela said the software maker plans to remain the leader in productivity software.

John Rymer, an analyst for Forrester Research, said that on its own, Workspace isn't all that exciting, but it's unlikely Microsoft will stop there.

"The payoff is going to come later, when you've got editing, real collaboration ... when it's really Office reconstituted," he said. "That's not going to come for a while."

After experimenting online in areas far from Microsoft's core business software products, the software maker's first step is, in part, meant to prove it is serious about offering software online, Rymer said.

Microsoft also announced Monday it will sell its Exchange, SharePoint and Communications server software as services over the Internet. That means that information technology departments at companies with more than 5,000 PC users won't have to buy disks, install software and manage the server computers. Instead, Microsoft will host the software on servers in its own data centers and sell access to companies on a subscription basis.